Buying a home can be an emotional journey — you’re excited about becoming a homeowner, yet might not know the ins and outs of home financing. Before choosing a lender in Massachusetts, you’ll need to understand mortgage rates and how they impact the amount you’ll ultimately pay on your home.
This Benzinga guide will walk you through the important aspects of mortgage rates, so you can select one of the best mortgage companies for your Massachusetts home.
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The Best Mortgage Lenders in Massachusetts are:
- Rocket Mortgage: Best Overall
- Flagstar: Best for Low-Income Buyers
- Citi Bank: Best for First-Time Buyers
- Guaranteed Rate: Best for Online Lending
- New American Funding: Best for Non-Traditional Lending
- Luxury Mortgage: Best for Self-Employed
- The Best Mortgage Lenders in Massachusetts are:
- What is a Mortgage Rate?
- What Factors Impact Your Mortgage Rate?
- What is a Mortgage Type?
- What is a Mortgage Term?
- Current Mortgage Rates in Massachusetts
- Calculating Interest in Massachusetts
- Lender Credit Score Minimums in Massachusetts
- 6 Best Mortgage Lenders in Massachusetts
- Key Considerations
- Frequently Asked Questions
What is a Mortgage Rate?
Your mortgage rate refers to the rate of interest you’ll pay on your home loan. When you take out a home loan for $300,000, for example, you’ll pay back not only the $300,000 you borrowed but also the interest, which will be determined by your individual mortgage rate.
Securing a low mortgage rate can save you thousands of dollars in interest over the course of your loan. To find out how to lock in the best rate, let’s look at the factors that help determine your rate.
What Factors Impact Your Mortgage Rate?
It’s easy to find average mortgage rate data by city, lender or mortgage type, but there are a few personal financial factors that are important to understand. We’ll walk you through the most common factors lenders look at when determining your mortgage rate.
- Credit score: This is the most important factor lenders use when deciding on your mortgage rate. Although some lenders allow ultimate credit history, typically, the lower your score, the higher your rate and vice versa. If your credit score is low, you can work on improving it before applying for financing.
- Loan-to-value ratio: LTV (loan-to-value) is another important factor used to decide your mortgage rate. LTV looks at how much you’re borrowing versus the home’s value.
This means if your home costs $250,000 and you put down $25,000, you’ll need to finance the remaining $225,000. Your LTV is found by dividing $225,000 (the amount borrowed) by $250,000 (the home value). This would give you an LTV of 0.90 or 90%.The higher your LTV is, the riskier your mortgage is considered.
- Home location: Where your home is located also plays a role in determining your rate. Rates vary from city to city since local markets also vary. If your market is strong, you can expect lower rates. If your market is weak, loans might be considered at higher risks for defaults, leading to higher interest rates.
- Lender: Some rates are set by the federal government, while others are determined by your lender. Some lenders are known for their low rates and may offer alternative credit reporting to help you lock in a lower rate.
- Mortgage type and term: The type of mortgage you choose also impacts your rate. Some mortgage types come with incentives that reduce your rate. The length of your mortgage, or mortgage term, also affects your rate.
Next, we’ll take a closer look at mortgage types and how they help determine your rate.
What is a Mortgage Type?
There are a variety of mortgage types available for your Massachusetts home. We’ll look at the 4 most common types to give you a better overview of which is right for you. They include conventional, FHA, USDA and VA loans.
A conventional mortgage is funded by a traditional financial institution, like credit unions or banks. Rates for conventional mortgages are set by assessing how risky your loan is — usually by looking at your LTV and credit score. Since these mortgages are backed by private financial institutions, expect slightly higher mortgage rates.
An FHA mortgage is almost exclusively offered to first-time home buyers. This mortgage is funded by the Federal Housing Administration and is offered by most major lenders. FHA mortgages are less risky than conventional mortgages since they are backed by the federal government.
Benefits of FHA mortgages include low credit score requirements (580–620 minimums), low down payment options (3.5% down) and lower than market interest rates. If you put less than 20% down on your home, you’ll need to buy private mortgage insurance to protect the lender in case you default on your mortgage.
A USDA mortgage is offered for homes purchased in rural areas and is funded by the U.S. Department of Agriculture. If your home is outside of the city, it likely qualifies for a USDA loan. These mortgages are also offered by most lenders.
USDA mortgage benefits include flexible credit score requirements (alternative history accepted), 0 down payment options, lower than market interest rates and low mortgage insurance rates. If you put less than 20% down on your home, you’ll need to buy private mortgage insurance to protect the lender in case you default on your mortgage.
A VA mortgage is offered to current or former veterans and their family members. This mortgage is funded by the U.S. Department of Veterans Affairs and is a great option that allows military members of all financial backgrounds to qualify for a home loan.
VA mortgage benefits include flexible credit requirements, 0 down payment, lower than market mortgage rates and no mortgage insurance requirement. Although you won’t have to buy mortgage insurance, you’ll need to pay a mortgage origination fee to cover loan processing charges (usually 1% of your loan’s value).
What is a Mortgage Term?
Another factor that can impact your mortgage rate is your mortgage term. The length of your mortgage is called your mortgage term. Here are a few common mortgage terms:
This is the most popular mortgage term. The 30-year fixed mortgage refers to a loan where you’ll pay a fixed rate for 30 years. This mortgage term is so common, because if ensures smaller monthly payments, at a higher interest rate. Because this loan is spread out over a large period of time, expect your mortgage to be more affordable monthly, even though you’ll pay more interest overall.
The other common fixed-rate mortgage is the 15-year fixed-rate. It’s the same as the 30-year, except the term is cut in half. This means you can expect to pay higher monthly payments at a lower interest rate. Due to the shorter term, you’ll pay less in interest than with the 30-year fixed term.
5/1 Adjustable Rate
An adjustable-rate mortgage (ARM) is a mortgage with a changing rate. The 5/1 ARM refers to a mortgage where your introductory rate is locked in for 5 years and then fluctuates based on the market. Your initial rate is typically low and often increases after the introductory period.
This mortgage term makes sense for buyers planning to make more money or sell their home after the introductory period.
Current Mortgage Rates in Massachusetts
Looking at current mortgage rates in Massachusetts can help familiarize you with typical rates. While these rates fluctuate based on the local market, Benzinga updates our rate data frequently to bring you the most up-to-date rate information.
|Loan Type||Current Mortgage Rate|
|5/1 ARM (adjustable rate)||3.75%|
Calculating Interest in Massachusetts
Your mortgage rate in Massachusetts can range based on the city you live in. Benzinga has compiled average home value and mortgage rate data to help you better plan for how much interest you’ll likely pay.
|City||Average Home Value||Loan Term||Current Rate||Monthly Payment||Total Interest Paid|
Lender Credit Score Minimums in Massachusetts
Your credit score will help determine your mortgage rate. We’ve compiled a list of 5 top Massachusetts lenders and their minimum requirements for your reference.
|Lender||Minimum Credit Score Required|
|PNC Financial Services||700|
|Guidance Residential||N/A (no minimum requirement)|
6 Best Mortgage Lenders in Massachusetts
Now that you know all about mortgage rates, let’s help you find the best lender. We’ve split the top 5 most popular Massachusetts mortgage lenders into categories to help you find the one that’s right for you.
1. Best Overall: Rocket Mortgage
Owned by Quicken Loans, Rocket Mortgage offers everything you could want in a lender: a larger selection of mortgages, online application, quick approval process and 24/7 customer service support.
You can choose from conventional, FHA, USDA and VA loans and will need a 620 credit score to qualify.
2. Best for Low-Income Buyers: Flagstar
If low down payment options are important to you, you’ll want to consider Flagstar.
Flagstar offers a large number of government-backed loans (FHA, USDA and VA loans) and low down payment conventional loans — as low as 3%.
You can apply in-person or online and you’ll need a 620 credit score to qualify.
3. Best for First-Time Home Buyers: Citi Bank
If this is your first time buying a home, Citi Bank can make the process feel less overwhelming.
They offer low down payment options (without mortgage insurance), discounts for current customers and will use alternative credit (rent and utility payments) to help you get a better rate.
You can choose from conventional, FHA and VA loans and a 620 credit score or alternative credit to qualify.
4. Best for Online Lending: Guaranteed Rate
If you don’t want to deal with loan officers or a bunch of red tape, you’ll love the quick application process Guaranteed Rate offers.
Guaranteed Rate has a good selection of mortgages and is known for its excellent customer service.
You can choose from conventional, USDA and VA loans and will need a 620 credit score to qualify.
5. Best for Non-Traditional Lending: New American Funding
If you’re not a fan of big banks, there are plenty of non-traditional lenders to choose from, like New American Funding.
This lender uses manual underwriting and alternative credit history to determine your credit score and offers a fully online application process.
You can choose from conventional, FHA, USDA and VA loans and will need a 620 credit score to qualify.
6. Luxury Mortgage: Best for Self-Employed
Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
Your individual mortgage rate will decide how much interest you’ll pay on your Massachusetts home loan. Locking in a low rate can save you on interest, but it’s not the only important factor. Decide what incentives are most important to you (low down payment options or alternative credit) before shopping for a lender.
Use these tips to help plan for your new home and solid financial future.
Frequently Asked Questions
1) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!